Intelligence Squared U.S. - 1 - 7/8/2014 Intelligence Squared U.S. Contact Publicist: Eileen Murphy 590 Madison Avenue, 30th Fl. T: 917-913-2233 New York, NY 10022 [email protected] October 26, 2010 Big government is stifling the American spirit For the motion: Phil Gramm and Arthur Laffer Against the motion: Nouriel Roubini and Laura Tyson Moderator: John Donvan RESULTS Before the debate: After the debate: 29% FOR 49% FOR 44% AGAINST 43% AGAINST 27% UNDECIDED 8% UNDECIDED Start Time: (18:45:49) John Donvan: And to introduce the gentleman who makes Intelligence Squared U.S. possible, Mr. Robert Rosenkranz. Robert Rosenkranz: Thank you very much, and welcome. It’s my role in these proceedings to frame the debate, and when we think about the language of tonight’s debate, we think of the American spirit as a pragmatic can-do optimism, the conviction that the future will be better than the past and that we have the power as individuals to create that future. Well, we don’t see that spirit shining very brightly in America today. University graduates are struggling to find jobs. Unemployed mid-career executives are accepting pay cuts, if they can get jobs at all. Corporate profits are at high levels, but very few companies can expect much growth. Investors are adjusting to sharply diminished returns from bonds and equities and hedge funds. Consumers are in no mood to spend. Instead, they are struggling to save, to offset the effects of declining real estate and stock market values. 18:47:02 Well, to what extent is this the fault of big government? If you’re in the finance sector, or part of the energy complex, or involved in healthcare or pharmaceuticals, it’s hard to think that big government is your friend. These sectors, by the way, account for more than half of all corporate profits. They are dealing with higher capital requirements, costly and intrusive regulation, restrictions on profit margins, and other new impediments to growth. If you create jobs for others you will almost surely fit President Obama’s definition of the rich, and if you are rich you are facing substantially higher federal and Prepared by National Capitol Contracting 200 N. Glebe Rd., #710 Arlington, VA 22203 Intelligence Squared U.S. - 2 - 7/8/2014 state income taxes, new healthcare taxes as well, not to mention a barrage of hostile rhetoric from Washington. 18:48:02 So, what is the counterargument? It’s that free market capitalism was on the verge of collapse when Barack Obama took office. Major financial institutions were on the edge of insolvency. The auto industry was close to bankruptcy. Economic output was in freefall. We didn’t have pessimism -- we had panic. Only big government could have restored confidence in these circumstances, and indeed it succeeded in pulling us back from the abyss. It did so by making money cheap and abundant, which restored order to stock and bond markets. It provided fiscal stimulus to maintain demand for goods and services. It kept the auto industry out of bankruptcy, saving hundreds of thousands of jobs. And it stabilized our financial institutions by requiring them to hold more capital and take less risk. There may well be a long-term price to pay for all of this, but when your house is on fire, the long run doesn’t matter. 18:49:04 You need to put the fire out and only big government could have done it. These two viewpoints are central to a deep political divide in America today. Which one has greater merit? We have some truly extraordinary panelists with us this evening to help us decide and it’s now my privilege to turn the evening over to John Donvan, our moderator. Thank you very much. John Donvan: Thank you. [applause] And I would just like to invite one more round of applause for Robert Rosenkranz. [applause] True or false: big government is stifling the American spirit. Well let’s have it out right here and right now. Welcome, everyone, to another debate from Intelligence Squared U.S., a contest of ideas, a verbal joust which only one side can win. 18:50:01 I’m John Donvan of ABC News, welcoming you to the Skirball Center for the Performing Arts at New York University and to hundreds of NPR stations across the nation, as these two teams on either side of me, two teams of two try, to win you over. The motion we are debating: big government is stifling the American spirit. And comprising the team that is arguing for this motion, we have Phil Gramm and Art Laffer. And I’d like to begin by talking to Phil Gramm. You are now a banker but you were long Prepared by National Capitol Contracting 200 N. Glebe Rd., #710 Arlington, VA 22203 Intelligence Squared U.S. - 3 - 7/8/2014 ago a professor of economics and in the time in between, you spent two decades in Congress where your reputation was made as a senator and congressman who was fighting to release the American taxpayer and the American businessman from the shackles -- shackles the word? Shackles of government, you accept that with a nod? And I don’t think many people know this but you know, remember this, but you actually went into congress as a Democrat. 18:50:59 And it was at the time that you supported the Reagan tax cuts in 1981 that your fellow Democrats pushed you off of the House Budget Committee and you switched parties. Was that -- as you think back, was that a traumatic event or was your inner Republican screaming to get out all along? [laughter] Phil Gramm: Well, I did more than that. I resigned from Congress and I went back home and I ran again because I’d been elected as a Democrat and even though I’d been rated as the most conservative member of Congress, I wanted people to have a choice as to whether I stayed or not. And I had nine Democratic opponents and I beat all nine. [applause] John Donvan: Art Laffer, your partner, is the only member of this panel who has an actual entry in an online dictionary. When you look up Laffer Curve, this is Laffer. Made famous in the 1980s as a symbolic representation of the concept that in certain situations, as you lower taxes, government revenue can actually go up. 18:52:02 And Art, the myth or the story about this is that you actually brought this to the Gerald Ford White House. You sat down with two young men named Dick Cheney and Don Rumsfeld and drew it on a napkin. Once and for all, is it true, was there a napkin? Art Laffer: Yes. [laughter] John Donvan: You bring any napkins tonight? Prepared by National Capitol Contracting 200 N. Glebe Rd., #710 Arlington, VA 22203 Intelligence Squared U.S. - 4 - 7/8/2014 Art Laffer: For a price. John Donvan: Oh. Your opponents, who are arguing against the motion that big government is stifling the American spirit, I’d like to introduce Laura Tyson, an economist. Your resume has a fair sprinkling of the phrase “first female to,” first female to be dean of the London School of Economics, first female chairman of the President’s Council of Economic Advisors, that was in the Clinton administration. At MIT as a young student, you were the first female to write a 532-page thesis; we do do our research. A 532 page thesis titled Inflation in Yugoslavia in 1962, 1972, an empirical analysis. Laura Tyson: Oh dear. John Donvan: We all read it. [laughter] Laura Tyson: Yes, absolutely. John Donvan: A terrific read but… Laura Tyson: Mm-hmm. Fantastic. 18:53:03 John Donvan: In one sentence, why you’re on this side. Laura Tyson: You know, I really do believe that there are paths that are appropriate for governments to carry out and that citizens wish them to carry them out and that we have to worry about doing them well, but we have to do them. John Donvan: Thank you very much. And your partner, Nouriel Roubini, who famously predicted the housing bubble and then predicted the crisis that followed it, you were right, fortunately for you. Prepared by National Capitol Contracting 200 N. Glebe Rd., #710 Arlington, VA 22203 Intelligence Squared U.S. - 5 - 7/8/2014 [laughter] John Donvan: This is your second debate with us. You previously debated, where you took the side that the financial crisis should be blamed on Washington, not on Wall Street. You won, overwhelmingly, 60 percent. So you are risking your perfect record by being here tonight. Welcome, Nouriel Roubini. [applause] And to all of our debaters. I want to ask you now to go to the keypads at your seats. 18:54:01 We want to know where you stand on this motion. If you agree with our motion, "Big government is stifling the American spirit," press number one. If you disagree, press number two. And if you are undecided, push number three. If you make a mistake on this, just correct your mistake and the system will lock in your last entry, and you can ignore the other numbers. Everybody good. So in this debate you, our live audience, are the judges. By the time the debate has concluded, you will have been asked to vote twice, once before the debate and once again at the end after all of the arguments have been made. And the team that has changed the most minds in the course of the debate shall be declared our winner.